AS CITY OF
SPRINGFIELD SEES TAXES RISE, ITS POPULATION FALLS
Illinois Policy Institute/
Joe Kaiser
With pension debt straining city finances,
local politicians have insisted on turning to its declining population
for more tax revenue.
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Springfield city officials headed into this fiscal year hopeful
new tax hikes would help repair the city’s broken finances. But they’ll need to
rely on fewer people to pay up.
Springfield lost nearly 900 residents from July 2016 to July 2017, according to
data from the U.S. Census Bureau. Since 2010, Springfield has lost more than
1,700 residents, fueling Sangamon County’s population loss of over 1,300
residents countywide during that timeframe. A loss of residents means a loss of
taxpayers, putting city officials in a budgetary bind intensified by growing
pension costs.
Unfortunately for remaining Springfield taxpayers, City Council’s answer for
budgetary shortfalls has been repeated hike taxes. The city’s fiscal year 2019
budget relied on an increase in its telecommunications tax and an expansion of
its hotel-motel tax, while still facing a $4 million deficit. The city had also
considered a 4 percent tax on natural gas, but it was unanimously voted down.
Some city officials have flirted with the idea of a dine-in tax, but it has yet
to be taken up for a vote.
This nickel-and-diming is on top of residents’ sky-high property taxes.
According to ATTOM Data Solutions, a property data company, Springfield
residents in 2017 paid an average effective property tax rate of 2.3 percent –
nearly double the national average.
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For the typical Springfield homeowner, those
property tax dollars flow to 10 different units of local government.
The property tax bill for a house in Springfield selling at about
$127,000 – near the median home value – was more than $2,600 in
2017. More than 60 percent that property tax bill flowed to
Springfield Public School District 186. In December, District 186
voted to raise its property tax levy by 3.3 percent for 2018,
meaning residents’ property tax burden will only intensify. In 2017,
nearly 18 percent of the typical Springfield homeowner’s property
tax bill went to government workers’ pension funds, amounting to
$467. And 100 percent of the amount paid to the city went toward
government-worker pensions.
This growing property tax burden, and the continued
insistence on new taxes, largely stems from the city’s troubled
pension funds. In 2016, Moody’s Investor Service downgraded the
city’s credit rating two notches, citing “considerable growth” in
pension liabilities. In 2018, Moody’s again took note of
Springfield’s pension woes, changing the city’s outlook from
“stable” to “negative.”
In the face of a shrinking population, Springfield officials should
turn away from tax hikes and instead look at spending reforms that
bring the cost of government down to a level taxpayers can afford.
Many of these reforms – including pension reform – will require
action from state lawmakers.
Current residents aren’t likely to receive Springfield’s rising tax
burden warmly, and local leaders should be wary of the fact that
taxpayers always have the option to head for the exits.
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